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Legal concepts you need to know Respondeat superior: Let the master answer Deep pockets Joint and severable liability Res ipsa loquitur: The thing speaks for itself Rebuttable presumption of negligence: instrument causing injury was in defendants exclusive control and the accident was one which ordinarily does not occur in the absence of negligence

7
Documentation The most important piece of legal advice Document completely but judiciously Do not change, erase or alter a writing Adding to a writing is permissible – sign, date, state why you are adding to the document (ex. new information, research, addendum, etc.)

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Contract law A promissory agreement between two or more persons that creates, modifies, or destroys a legal relation. An agreement consisting of a promise or mutual promises which the law will enforce or the performance of which the law in some way recognizes as a duty.

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Contract statute of frauds No action shall be maintained on certain classes of contracts or engagements unless there shall be a note or memorandum thereof in writing signed by the party to be charged or his authorized agent. Personal services, sale of land, etc.

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Legal entities Solo its just you, all the way Partnership joint owners (equal?) Group 3 or more Affiliation share overhead; separate (but equal?) Merger 2 or more practices join Franchise purchase the right to be part of a larger organization in return for specific privileges, expense sharing, etc

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Independent contractor New practice owners often are also independent contractors (or employees) in other settings to supplement their income Clearly defined by the IRS Not an employee Responsible for all taxes and contributions Look to the relationship between the parties

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Employee contracts Policy vs. contract What should I include What should I exclude How comprehensive should it be Court interpretation Burden of proof

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Employment at will Disclaimer Termination at any time With or without cause

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Protect interests by Confidentiality agreements Covenant not to solicit patients Covenant not to solicit employees Covenant not to compete during employment Return of property upon leaving the practice Beware of out-of-state corporations

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Confidentiality agreement Non-disclosure agreements Designed to protect the employer, seller or partner from disclosure of trade secrets – i.e. May contain trade secret protections Separate from non-competition clause May be severable from a non-compete agreement so not to violate right to work

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Confidentiality agreement Non-disclosure agreements cont. Covenant not to compete arising from sale of business or partnership dissolution may be valid Employers may not force an employee to sign a covenant not to compete or a condition of employment – unfair competition Look to geographic area, time, activity, publics right to receive care State court may differ from federal court

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Covenant not to compete Restrictive or a restraint of trade – Is it reasonable, consistent with public welfare and bargained for pursuant to lawful contact? Goal is to prevent patient or record stealing or punish someone who does Enforceable if reasonable in light of the facts and circumstances

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Covenant not to compete cont. Cannot restrain trade – cannot be too restrictive and unfair to the parties involved or public welfare Generally not honored in CA – check state law – Reasonable time limit only long enough to enable former employer or buyer to protect the practice Part of an employment contract, purchase agreement, partnership or pre-existing relationship

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Compete clause (Employees, partners, mergers, associates) Shows greater durability and enforceability Doctor #2 can leave doctor #1, BUT to practice in the same town, he or she must pay X to #1 Holds up in court Must have consideration Must be reasonable and specific Designed to mitigate damages – liquidated damages

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What is sexual harassment or discrimination? Unwanted and offensive touching Objectionable behavior Unwelcome sexual advances Requests for sexual favors Boss has no special right Hostile environment

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Protect yourself Prompt and effective action to end alleged harassment after complaint Employee must make a complaint If no action is taken to resolve the complaint, the employee may sue and receive actual damages, court costs, attorneys fees, and even punitive damages for willful violation

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Office lease considerations Mistake to pay operating expenses based on leased space rather than on leasable space Lease rate: rent + operating expenses and how calculated; increases Maintenance and upkeep; remodeling Amount of free rent Length of time space has been available; % occupancy; length of current tenants leases, lease incentives to current residents Any exclusionary businesses (i.e. other optical)

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Practice purchase or sale Lump sum is not the best option Serial sale: interest on sale is paid monthly (with principal). Tax may be computed on this interest – as a gift tax against the selling doctor unless the interest is already worked into the price Structured sale (best option): buyer has option to speed up payments Check with your accountant and tax attorney

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Protect your partnership Choose wisely, carefully, consider a trial run Balance the work load; establish your roles Compromise Have a contingency plan Consult an attorney and put it in writing Communication is important to avoid a divorce Keep your spouse out of the business